labels: wal-mart, retail, bharti enterprises
Wal-Mart enters India in 50:50 JV with Bharti news
06 August 2007

The world''s largest retailer Wal-Mart Stores Inc and Sunil Mittal''s Bharti Enterprises today announced the entry of Wal-Mart in India with the signing of their equal joint venture agreement that had been awaiting government approval for the past several months.

The wholesale retailing venture, Bharti Wal-Mart Private Ltd, is a wholesale cash-and-carry and back-end supply chain management, the two companies said, in line with government of India guidelines that prohibit foreign multi brand retail operators in the country, though foreign single-brand retailers are allowed a 51-per cent stake in joint ventures.

The JV will open 10 to 15 cash-and-carry facilities over seven years. The first of the stores, which will sell groceries, consumer appliances and fruits and vegetables to retailers and small businesses, is slated to open in north India by the end of 2008.

In addition, Bharti Retail, the 100-per cent subsidiary of Bharti Enterprises, that will own and manage the retail stores, has entered into a franchise agreement with Wal-Mart, which will provide technical support to Bharti Retail.

"We are delighted to partner with Wal-Mart for wholesale cash-and-carry and back-end supply chain management operations in India," said Sunil Bharti Mittal, chairman and Group CEO, Bharti Enterprises. "Wal-Mart''s global expertise in supply chain and logistics will bring enhanced efficiencies across the retail ecosystem.

"This venture promises to bring great value to millions of farmers, artisans, small manufacturers and retailers across India. We are pleased to be a partner in developing this sector which is set to become a significant engine of India''s economic growth," he added.

Wholesale cash-and-carry operations provide small retailers and business owners a wide range of quality products at competitive wholesale prices that help them enhance their businesses and profitability.

The Bharti Wal-Mart business-to-business (B2B) wholesale cash-and-carry joint venture will serve kirana (grocery shops) stores, fruit and vegetable resellers, restaurants and other business owners. It also will serve other retailers such as Bharti Retail, which is setting up a chain of stores in India that are 100 per cent owned and operated by Bharti.

The wholesale cash-and-carry venture will invest in setting up an efficient supply chain and link farmers and small manufacturers directly to retailers, thereby maximising value for farmers and manufacturers on the one end and retailers, and in turn, consumers on the other.

The venture will support farmers and small manufacturers who have limited infrastructure and distribution strength, and the supply chain will enable minimum wastage, particularly of fresh foods and vegetables.

Mike Duke, vice chairman, Wal-Mart Stores, Inc. said, "We are delighted that, in Bharti, we have a well-respected partner who has a deep understanding of the local market. Through our wholesale cash-and-carry joint venture, we will help drive efficiencies across the supply chain and work towards the betterment of India''s farmers, small manufacturers and retailers, in line with our global vision of saving people money so they can live better. We would also like to leverage our global scale to transform some of these suppliers into exporters with access to our global markets over time."

The first wholesale cash-and-carry facility is targeted to open by the end of next year. Over the next seven years, the venture is expected to open 10 to 15 wholesale cash-and-carry facilities and sell a wide range of fruits and vegetables, groceries and staples, stationery, footwear, clothing, consumer durables and other general merchandise items.

Bharti Wal-Mart Private Limited will bring modern supply chain and back-end logistics expertise to India, bringing Wal-Mart''s global best practices in such areas as just-in-time inventory, retail information systems, cold chain infrastructure, GPS for truck and trailer tracking, and fuel management systems.

Rajan Bharti Mittal, managing director, Bharti Enterprises, said, "Creating a strong back-end infrastructure will be one of the critical components in the development of modern retailing in India. This partnership is committed to bringing in world-class processes and technologies in the area of supply chain, logistics and cold chain that will be bring immense value to retailers, both big and small, across the country and ultimately benefit the entire retail ecosystem through better quality, and more choice at better prices."

Raj Jain, country president for Wal-Mart''s operations in India, will oversee the India joint venture. He said, "One of the key reasons for Wal-Mart''s international success is the fact that in every location where we operate, we are local. We source local products from local suppliers that appeal to local tastes, needs and fashions.

"As a wholesale cash-and-carry business, our endeavour is to work with and develop local suppliers and create local beneficiaries along the supply chain. It is our hope that big and small retailers and businesses will be our customers, take advantage of the efficiencies we provide and derive significant benefits for their businesses," added Jain.

Currently, multi-brand retailers like Wal-Mart are limited to cash-and-carry, or wholesale, and franchise deals, in an effort to protect the small kirana shops across the country, which make up the bulk of the Indian retail sector, estimated at at nearly $350 billion.

The sector is projected to double in size by 2015, with modern retail expected to expand its market share exponentially from 3 per cent now.

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Wal-Mart enters India in 50:50 JV with Bharti